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    Cafés Monte Bianco - Questions and Additional Data

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    Marco Bolzonello
    This document provides information and instructions for evaluating different strategies for Cafés Monte Bianco, including a private-brand coffee strategy and a mixed strategy. It asks the reader to: 1) Estimate key accounting variables like profit, return on equity, and cash flow for the private-brand coffee strategy. 2) Repeat the analysis assuming a mixed strategy of premium and private-brand coffee production. 3) Compare the results of the mixed strategy to the private-brand strategy. 4) Make recommendations to Giacomo Salvetti, the owner of Cafés Monte Bianco, based on the analysis.

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    Cafés Monte Bianco - Questions and Additional Data

    Uploaded by

    Marco Bolzonello
    173 views1 page
    This document provides information and instructions for evaluating different strategies for Cafés Monte Bianco, including a private-brand coffee strategy and a mixed strategy. It asks the reader to: 1) Estimate key accounting variables like profit, return on equity, and cash flow for the private-brand coffee strategy. 2) Repeat the analysis assuming a mixed strategy of premium and private-brand coffee production. 3) Compare the results of the mixed strategy to the private-brand strategy. 4) Make recommendations to Giacomo Salvetti, the owner of Cafés Monte Bianco, based on the analysis.

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    Cafés Monte Bianco_questions and Additional Data

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    Cafés Monte Bianco_questions and Additional Data

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    This document provides information and instructions for evaluating different strategies for Cafés Monte Bianco, including a private-brand coffee strategy and a mixed strategy. It asks the reader to: 1) Estimate key accounting variables like profit, return on equity, and cash flow for the private-brand coffee strategy. 2) Repeat the analysis assuming a mixed strategy of premium and private-brand coffee production. 3) Compare the results of the mixed strategy to the private-brand strategy. 4) Make recommendations to Giacomo Salvetti, the owner of Cafés Monte Bianco, based on the analysis.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    173 views1 page

    Cafés Monte Bianco - Questions and Additional Data

    Uploaded by

    Marco Bolzonello
    This document provides information and instructions for evaluating different strategies for Cafés Monte Bianco, including a private-brand coffee strategy and a mixed strategy. It asks the reader to: 1) Estimate key accounting variables like profit, return on equity, and cash flow for the private-brand coffee strategy. 2) Repeat the analysis assuming a mixed strategy of premium and private-brand coffee production. 3) Compare the results of the mixed strategy to the private-brand strategy. 4) Make recommendations to Giacomo Salvetti, the owner of Cafés Monte Bianco, based on the analysis.

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    of 1

    Cafs Monte Bianco: Building a Profit Plan

    (Chap. 5 R. Simons)
    Evaluate the attractiveness of the different strategies

    1) Using the information provided by the case for private-brand coffee (grade D),
    estimate key accounting variables for:
    (a) Profit wheel
    (b) ROE wheel
    (c) Cash wheel

    2) Operate the same checks assuming to adopt a mixed strategy as follows:


    - Production of Coffee Preminum TYPE "A: Kg. 1.792.000
    - Production of Prvate Brands: Kg. 4.000.000.
    (Assume that this mix has been determined on the economic evaluations-product with a higher
    margin - and market assessment).
    It also assumes, an hypothesis regarding the prevision of Discretionary cost of R & D, Sales and
    Administrative Expenses:
    - 1: keep the same absolute value of 2000;
    - 2: maintain the same value as a percentage of sales of the year 2000.
    Estimated therefore the key variables of the profit cycle, the cycle of ROE and cash strategy "mixed
    strategy".

    3) After estimating the key variables in the Profit Wheel, ROE Wheel and Cash Wheel of the
    Mixed strategy", compare it with those of the Private-brand coffee strategy;
    4)
    5) Based on your analysis, what recommendations would you make to Giacomo Salvetti?

    Additional Assumptions
    To supplement the information contained in case you use the following additional assumptions:

    a) Finished goods inventory at December 31, is equal to zero (the initial stock is valued
    at variable cost);
    b) There is no change in accounts payable and inventories of raw materials from the
    beginning to end of the year;
    c) Borrowing costs are the same as those of Table 1;
    d) The tax rate is the same as those in Table 1;
    e) Cash outflows for tax payments take place in June and December;
    f) Dividends are not distributed;
    g) The distribution of sales is constant in the various months of the year and between a
    product and the other;
    h) In the case of mixed strategy is assumed that the costs of R & D, sales and
    administrative levels are maintained in the current year as shown in Table 1.

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